In October, global crude steel production increased by 2.4% year-on-year, and the increase in production in other parts of the world offset the decline in China's output. In October, global crude steel production increased to approximately 118 million tons, which was approximately 115 million tons in the same period of last year. However, China's crude steel production fell by 3.8% year-on-year to 50.3 million tons. In October, the global crude steel capacity utilization rate rose to 75.4% from 74.8% in September, but fell by 2.7 percentage points from 78.1% in the same period of last year.
Last week, the price of steel remained unchanged. The average price index for steel products fell by 0.98% during the week. All steel grades fell slightly, with the largest decline being thread and wire, which fell 1.23% and 1.10%, respectively.
Raw materials: Ore prices are firmer than steel prices: Tangshan ore prices continue to rise by 1%, and Indian ore CIF prices remain unchanged. Platts' index for the first quarter of 2011 was 62% of the value of CIF or CIF, which was US$157/ton, compared with last week. The increase was 2.6%, which was $6.5/ton lower than the spot price; the freight rate from West Australia to Beilun Port fell by 4%; the freight rate from Brazil to Beilun Port fell by 0.1%; the BDI Index dropped by 6.8%. The prices of coke, scrap steel and pig iron remain basically unchanged. In the short term, in the sensitive period of iron ore negotiations, the miners may control shipments appropriately so that prices remain high. From the next year, ore prices may gradually fall.
Earnings trends: The overall gross profit of the ton steel fell this week. From the perspective of cost changes, after considering the inventory cycle, the cost of spot and intermediate steel mills increased by 35 yuan/ton, and the cost of long-term steel mills dropped by 5 yuan/ton. Because the prices generally fell, the gross profit per ton of the spot and intermediate steel products decreased by 54 to 100 yuan/ton, and the gross profit per ton of long products outside the long steel factory fell by 15 to 25 yuan/ton. If you do not consider the inventory cycle, because the price of steel fell this week and the price of ore rose, the gross profit per ton of various steel mills dropped by 29~87 yuan/ton.
Inventory: In the first two weeks, the decline in long product stocks dropped by 1.6% this week, which is a 13% decrease, with wire stocks down by 1.8% and rebar stocks down by 1.56%. From the past three months, long products stocks have fallen by 25%. Rose by 3%. The rapid decline in inventory corresponds to higher prices in the long products market. On the whole, the national steel society stocks fell by 1.2% from the previous week, of which the plates decreased by 0.95%. From a historical point of view, in October and November when demand was relatively high, it was the best time to reduce inventory. After entering winter in December, inventory will enter a new round of rising cycles.
China-Thailand jointly released an industry research report. The supply and demand structure of the steel industry is undergoing positive changes, and continues to be optimistic about (1) the construction steel with the most obvious improvement in supply and demand. It is recommended to pay special attention to Sansteel Dawning (002110-CN) and Linggang (600231-CN). ) and Bayi Steel (600581-CN). (2) Benefit from the supply of rigid leading steel companies, including Baosteel (600019-CN), Anshan Iron & Steel (000898-CN), Taigang Stainless (000825-CN), and Hebei Iron & Steel (000709-CN).
Economic restructuring will not happen overnight and it will take time. During this period, ensuring the stable operation of the economy with higher investment growth will provide a harmonious environment for the smooth transition of the economic structure. The recent NDRC's comprehensive investigation of 442 "4 trillion" unfinished projects is still the government's primary goal. The intensification of construction of 442 projects will support infrastructure investment to maintain high growth. On the other hand, the purpose of this round of real estate regulation is to control housing prices, and increasing supply through large-scale affordable housing construction will be the most effective means for the government to control housing prices. The amount of affordable housing provided by the Ministry of Housing and Urban-Rural Development in 2010 was sufficient to offset the risk of a 20% decline in the newly-started area of ​​real estate, and the latest data showed that the cumulative year-on-year growth of new construction starts remained at a high of 61.9%. It is expected that the supply of affordable housing will continue to increase substantially in 2011.
Supply will continue to tighten under the pressure of energy conservation and emission reduction. According to theoretical calculations, in order to meet the energy saving and emission reduction targets for the 11th Five-Year Plan, steel output in the second half of the year will decline by at least 7.2%. According to the current plans for production reduction in various regions, steel output can only be reduced by about 3%, so severe production restriction measures will continue during the year. Looking forward to 2011, the report believes that the 12th five-year energy saving and emission reduction targets will be more stringent, and in order to avoid repeating the mistakes made during the 11th Five-Year Plan period, stringent control measures are expected to continue. It is believed that the recent ministries and committees have begun to clean up steel projects, and the measures to report that the regions will be subject to regional restrictions will clear the way for the elimination of the 70 million tons, and especially the 70 million tons of obsolete and lagging tasks in 2011. On the other hand, even if the reduction in production capacity due to energy conservation and emission reduction is not considered, the new production capacity in 2011 will have dropped from nearly 50 million tons in 2010 to about 20 million tons.
The report pointed out that long products stocks have been effectively digested. Divided by varieties, construction steel stocks have dropped to the beginning of the year and inventory pressure has eased. According to the latest trader's research, starting from last week, due to the increase in the maintenance of building steel reeds and the total control of the use of steel reeds in Hebei, the construction steel shipments have decreased significantly in the past two weeks, and at the same time, they started last week. Work sites in East China have also begun to actively stock up, resulting in a rapid decline in long products stocks, prices have also apparently pulled up; plate conditions are still not optimistic, slow and unsatisfactory trading of HRC inventory, but with the long With the rapid rise in timber prices, the price of flats has also shown signs of recovery in the past two days. Taken together, the long-term stocks decline is very obvious at present, and flow to the terminal level directly, the stock pressure of the board is still large.
The improvement of supply and demand will push up the formation of steel prices and the decline in the price of ore agreements. In the fourth quarter, the profitability of the steel industry will increase significantly. Based on our macro team's judgment that the economic growth rate of the chain will bottom out in the fourth quarter of 2010, the report believes that the valuation of the steel industry has bottomed out.